How Not to Stimulate the Economy

Facts matter: Sign up for the free Mother Jones Daily newsletter. Support our nonprofit reporting. Subscribe to our print magazine.


The Wall Street Journal reports that there’s been a sudden outbreak of Christmas cheer on Capitol Hill, and the chances of a government shutdown on Friday are now almost nil. There’s also — maybe — been an outbreak of remarkable good sense. The biggest obstacle in the way of a deal has been figuring out how to offset the cost of an extension of the payroll tax cut, and the Journal reports that several new possibilities are now under consideration, including this one:

Another option is for the measure to be only partly offset by revenues or spending cuts elsewhere—an approach that Democrats and the White House have said they could support.

Well huzzah. The whole point of the payroll tax cut is that it’s supposed to be a short-term economic stimulus, and the best way to accomplish that is not to pay for it at all. If you cut taxes one place and raise them another, that doesn’t have much net effect. Likewise, if you give people more money to spend but then offset it with less government spending, that doesn’t have much net effect either. If you want to stimulate the economy via fiscal policy, the best way to do it is via straight-up deficit spending.

Unfortunately, the Journal says that lawmakers are only considering a plan to “partly” offset the payroll tax cut with other revenues or spending cuts. Too bad. That’s better than nothing, but better still would be to forget about offsetting it at all and just pass the damn thing.

THE TRUTH...

is the first thing despots go after. An unwavering commitment to it is probably what draws you to Mother Jones' journalism. And as we're seeing in the US and the world around, authoritarians seek to poison the discourse and the way we relate to each other because they can't stand people coming together around a shared sense of the truth—it's a huge threat to them.

Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

payment methods

THE TRUTH...

is the first thing despots go after. An unwavering commitment to it is probably what draws you to Mother Jones' journalism. And as we're seeing in the US and the world around, authoritarians seek to poison the discourse and the way we relate to each other because they can't stand people coming together around a shared sense of the truth—it's a huge threat to them.

Which is also a pretty great way to describe Mother Jones' mission: People coming together around the truth to hold power accountable.

And right now, we need to raise about $400,000 from our online readers over the next two months to hit our annual goal and make good on that mission. Read more about the information war we find ourselves in and how people-powered, independent reporting can and must rise to the challenge—and please support our team's truth-telling journalism with a donation if you can right now.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate